It was clear to executives at the Timken Corp. that they needed to take a close look at their distribution network. The bearing and steel alloy manufacturer had purchased another bearing manufacturer, Torrington Co., in 2003. While the acquisition strengthened Timken's position in the market, it also created infrastructure redundancies.

On the East Coast, for example, Timken found itself with four or five distribution facilities that overlapped, recalls Tim Graham, director of worldwide logistics. That situation conflicted with the company's strategy to present "one face to the customer." "Rather than making multiple shipments, we wanted to make sure that for one order there would be one shipment," he explains.

To help streamline its distribution network, Timken created a site selection team that included Graham, Timken's North America logistics manager, a supply chain analyst, and distribution center managers. It also included executive vice presidents from the company's two major business units, who provided marketing and sales insight.

The team used LogicNet modeling software from LogicTools to conduct "what if" scenarios that considered such factors as cost, service levels, and how changes in its distribution network would affect customers. "We were looking for the best balance of cost and service," says Graham. "If anything, we weighted more for service."

Based in part on the results of its modeling efforts, Timken expects to consolidate some of its facilities and change the mission of others, says Graham. The company sees enough benefits in using the software that it plans to expand the application globally. "This is not just something we ran and then put on a shelf," says Graham. "It's a living, breathing tool that we will keep up. It will definitely be helpful with any future acquisitions."

One of the benefits of using technology to analyze a distribution network is that it provides an objective evaluation. This can come in handy not only for battling internal politics but also for negotiating with external providers.

Otis Spunkmeyer, a manufacturer and distributor of baked goods, found that out when it wanted to analyze its third-party warehouse network. "We had gone to public warehousing two years before…but we were a little uneasy about whether the network was properly aligned," says Mike Mahon, director of distribution operations. Concerned that the warehouse operators' advice might not be objective, the company hired software vendor Insight to do the analysis. "We wanted an independent voice," he says.

Using its SAILS solution, Insight developed a baseline model of Otis Spunkmeyer's warehouse network, then calculated where they should be located. Based on that analysis, the company negotiated with its warehouse vendor in the Northeast to move its forward inventory location from New York to Allentown, Pa. "This made more sense based on where our plant and customers are located," Mahon says. The move saved the company $250,000 in transportation costs, mostly on inbound shipments from the plant. Otis Spunkmeyer also consolidated its Southwest distribution centers to gain significant savings in inventory holding costs.

The baker also used the technology's independent eye to assess its network of manufacturing plants. The model validated the company's decision to expand capacity and open a new line at its South Carolina plant, and confirmed that its other manufacturing plants also were optimally located.